We can see PPRs as wrappers for financial assets. Investors could buy those assets directly, or decide to buy a PPR that holds them. In both cases, investors are putting their money in the assets themselves, but in ways that differ in tax treatment and costs.

This article is not intended to explain PPRs’ intricacies — that’s already well covered in other online resources. Instead, it serves to point people to resources I’m building to be able to assess if and when a PPR is worth investing in. For now, those resources are:

• A Python package, called PyPPR, that offers a collection of financial functions regarding PPRs. The documentation for it is available at https://goncalovf.github.io/pyppr/
• A study on the viability of a PPR inspired in the investment approach often associated with John C. Bogle: diversified, passively-managed, low-cost investing. The study is available at https://github.com/goncalovf/ppr-market-research/

I’ll continue to improve these resources and possibly add new ones to the list.

Often, I hear that “renting is always bad for your finances because you’re essentially giving money away to the landlord, which could otherwise be used to build home equity.”

For many people, this thinking is wrong. The unintuitive truth is that renting is often cheaper than buying. Or, if it is indeed more expensive, it’s less so than people think.

To clarify the real costs of ownership and renting, and make them comparable, I built the calculators linked below. They are both in Google Sheets so that you can inspect the calculations being made and change them as you see fit. Feel free to share as well!

• USA: Buy vs Rent calculator
• Portugal: Calculadora sobre Comprar vs Arrendar

Both are heavily based on the calculator created by The New York Times.

“Thanks, that’s cool, but the stock market is not for me”, one replied with wide-opened eyes as if I had suggested joining the Devil’s cult.

Why such an immediate negative reaction? What is wrong with the stock market?

Let me try to guess some of the complaints you may have: the stock market is the climax of an economic system addicted to consumerism. A system where culture is shaped to enable corporations instead of corporations designed to enable culture. And the stock market is the key driver of this misguided focus. The stock market is concerned by one thing and one thing only – profits – and therefore promotes all sorts of bad incentives that hurt society.

You may have seen this cartoon:

But what if I told you that the stock market is just a tool and that, as such, it isn’t intrinsically good or bad? Like Facebook or Instagram or any other social media platform, it is just a tool that can be wielded in a multitude of ways and for several purposes (I’ll elaborate on social media on another post). It is how you use these tools that can be judged as good or bad.

Forget for a moment your biases of the stock market and consider only this: the stock market is a tool with which you finance companies’ growth investments in return for part of the profits they will generate with that growth. Do you see anything intrinsically wrong with that?

What if I told you that, through the stock market, you can help mission-driven companies do the work they want to do? Companies that have sustainability and social benefit embedded in their core values?

What if I told you that the stock market enables win-win-win opportunities, where sound companies win, you win, and society as a whole win? Companies that genuinely want to do good are (like any other company) loathed by the constant uncertainty of whether they’ll survive in the market. By investing in them through the stock market, you’re improving their odds of survival, allowing them to provide their good service to society, while making sound investments that will benefit you.

I understand that seeing many people using a tool with wrong intentions may discourage you from using that tool at all. But I urge you to distinguish the use of the tool from the tool itself. Make the intellectual effort of seeing the stock market for what it is, and consider investing, for everyone’s sake.

4 min read.

Most of us fall into one of two camps in regard to our money: We either ignore it and feel guilty, or we obsess over financial details by arguing interest rates and geopolitical risks without taking action. Both options yield the same results—none.

—Ramit Sethi, I Will Teach You To Be Rich

Throughout my life, I fell on the “ignore it and feel guilty” group. I never knew how much money I had in the bank, didn’t care much about how it was invested and had no visibility on how my income was being allocated to spending and savings.

Recently, however, at the age of 27, I decided to take control of my finances to ensure that I’m on the right track to having the life I want to have. So I did some research, defined my financial goals, and built a savings-and-investment plan to achieve those goals. And now I’m sharing my conclusions with you, in hopes that you’ll too take an active role in managing your finances and reach your true potential.

This guide is mostly directed to young adults in their 20s and early 30s, who will face some big expenses soon like buying a car, putting a down-payment for a house, paying for a wedding and/or a first child, and who have a long time to prepare for retirement. I’ll go into detail on the investment decisions I’ve made, and because these decisions depend on the country you’re in (more on this later), it’s particularly directed to my fellow Portuguese people. Nevertheless, if you’re from another country, going through my decision process will help you learn how to approach investing in your country as well. A lot of my insight came from reading on how to invest as a citizen of the US and UK and adapting to my situation.

Managing your finances entails many aspects, namely: earning more, spending consciously, getting better deals on big-ticket purchases such as a car or a house, and investing your savings. In this guide, I’ll only cover investing your savings because it’s both relevant to do right now and can be quite complicated, especially to people that did not have any education in economics and financial markets. To get a broader approach on how to manage your finances, I encourage you to read I Will Teach You To Be Rich by Ramit Sethi.

In summary, we’ll define our financial objectives and set up a plan to achieve them. We’ll first set up two savings-accounts: one for the short/medium-term, to cover foreseeable big expenses (car, house, wedding, etc.); and a second savings-account for the long-term. The long-term savings are to only be withdrawn at our retirement, to allow us to enjoy our end of life more freely. Then, we’ll choose where to invest with each account, and finally, decide how much of our savings (both the accumulated until now and future savings) we’ll allocate to each account.

We Won’t Become Financial Experts

Before we start building our personal finance system, an important note. Don’t think that you’ll have to get every single part of your finances in order before truly getting started managing your money. This thought will paralyze you. Just like you don’t have to be a master chef to cook for yourself or your loved ones, you don’t have to become a financial expert to take your first steps towards controlling your finances.

Getting started is more important than becoming an expert. (…) The easiest way to manage your money is to take it one step at a time—and not worry about being perfect. I’d rather act and get it 85 percent right than do nothing. (…) It’s better to make [the mistakes you’ll unavoidably make] now, with a little bit of money, so that when you have more, you’ll know what to avoid. (…)

Honestly, if you’re twenty-five and just starting out, your biggest danger (…) is being lazy and overwhelmed and not doing any investing at all. That’s why it’s important to understand the basics but not get too wrapped up in all the variables and choices.

—Ramit Sethi, I Will Teach You To Be Rich